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Although we disagree with the idea that "the tape tells all," it is important for all traders to stay on top of key technical happenings on the charts. Below is our current "executive summary" take on the State of the Tape.
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Technical Talk: August 27, 2010
Current Strategy:
After yesterday's ugly finish, the bulls appear to be back at it. Well, okay, there might be just a little short-covering going on as well here :-) But in any event, the keys are two-fold this morning: (1) The S&P played tag with the 1040 level again today and it held up. (2) There is short-term resistance just overhead at 1063. So, while the green on the screen is enjoyable for the bulls, the bears are by no means out of this game.
We'd be Short-term Buyers At: A close above 1067 on S&P
We'd be Short-term Sellers At: A close below 1040
Trend and Momentum Indicators:
Short-Term Trend: Although the volatility is difficult to deal with, it would appear that a short-term base is taking shape.
Intermediate-Term Trend: As long as the 1040 level can hold, we're becoming more constructive on the intermediate-term outlook.
Market Internals: Since our TBC models are based on closing values, both are back in the red zone today.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: No improvement yet on the momentum front as of yet. The bulls definitely need to show us a little something in order for us to upgrade the category.
Support/Resistance Zones for S&P 500:
- Current Support: 1040ish
- Current Resistance: 1070
Early Warning Indicators:
Overbought/Oversold Condition: Same song, different day... The market remains very oversold from a short-term perspective and is now neutral on the intermediate-term view.
Investor Sentiment: Although Ben Bernanke may have provided some soothing words today, sentiment remains quite fragile at the present time.
Chart Watch:
Below are snapshots of the two main charts we watch closely each day from a technical perspective. The indicators we display on the charts below include: 50 day simple ma (purple), 25 day weighted ma (cyan), 10 day exponential ma (thick orange), 200 day simple ma (thin orange), and stochastic %K using 14 and %D.
S&P 500:
NASDAQ Composite
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